Canadian CPI Preview: Forecasts from four major banks, a detour from the path towards slower inflation

Statistics Canada will release October Consumer Price Index (CPI) data on Wednesday, November 16 at 13:30 and as we get closer to the release time, here are the forecasts by the economists and researchers of four major banks regarding the upcoming Canadian inflation data.

Headline is expected at 6.9%, the same as in September, while Core, which excludes volatile food and energy prices, is expected at 6.3% year-on-year vs. 6.0% in September.

RBC Economics

“We expect the annual rate to have risen to 7%, up from 6.9% in September but still down from the 8.1% recent peak in June. Inflation growth excluding more volatile food and energy products were likely little changed from a 5.4% annual increase in September as weakness tied to home-owning related expenses are offset by strength seen elsewhere.”

TDS

“We look for headline CPI to edge higher to 7.0% in October as energy prices help drive a 0.8% MoM increase. Gasoline will provide the main catalyst for the increase, while mortgage interest and rents provide another source of strength as seasonal factors will weigh on groceries. Core inflation should also tick higher in October, with CPI trim/median rising by 0.1pp.”

NBF

“Rising gasoline prices and resilient strength in the services segment should have contributed to boosting the headline figure. Core inflation goods, on the other hand, could have continued to decelerate, but not enough to prevent the headline index from advancing 0.7% on a monthly basis (before adjustments for seasonality). If we are right, the 12-month rate should drop one tick to 6.8%. While we expect a moderation in core measures on a MoM basis, a positive base effect should limit the downside in the 12-month rate, with CPI-trim remaining unchanged at 5.2% and CPI-median increasing one tick to 4.8%.”

CIBC

“Just when we thought inflation was decelerating, a pop back up in gasoline prices likely drove a re-acceleration in October. The increase in pump prices this October contrasts with a decline during the same month of last year, and this is the main reason why our 7.2% YoY forecast for headline CPI this month reflects an acceleration from the 6.9% seen in September. Monthly increases in food and ex food/energy prices also likely remained above the pace that would be consistent with a 2% inflation target, but the annual rates for those categories would be little changed relative to September. Unless gasoline prices start to turn back down again, headline inflation could well accelerate further in November as well. However, after that inflation should start to decelerate again, with that move becoming more obvious in mid-2023 when some of the largest monthly price increases this year start to fall out of the annual calculation.”